Posted
by
Soulskill
on Friday August 16, 2013 @03:09PM
from the all-about-the-benjamins dept.

Matt Taibbi writes in Rolling Stone about the economics behind college tuition. Interest rates get the headlines and the attention of politicians, but Taibbi says the real culprit is "appallingly high tuition costs that have been soaring at two to three times the rate of inflation, an irrational upward trajectory eerily reminiscent of skyrocketing housing prices in the years before 2008." He writes,
"For this story, I interviewed people who developed crippling mental and physical conditions, who considered suicide, who had to give up hope of having children, who were forced to leave the country, or who even entered a life of crime because of their student debts. ... Because the underlying cause of all that later-life distress and heartache – the reason they carry such crushing, life-alteringly huge college debt – is that our university-tuition system really is exploitative and unfair, designed primarily to benefit two major actors. First in line are the colleges and universities, and the contractors who build their extravagant athletic complexes, hotel-like dormitories and God knows what other campus embellishments. For these little regional economic empires, the federal student-loan system is essentially a massive and ongoing government subsidy, once funded mostly by emotionally vulnerable parents, but now increasingly paid for in the form of federally backed loans to a political constituency – low- and middle-income students – that has virtually no lobby in Washington. Next up is the government itself. While it's not commonly discussed on the Hill, the government actually stands to make an enormous profit on the president's new federal student-loan system, an estimated $184 billion over 10 years, a boondoggle paid for by hyperinflated tuition costs and fueled by a government-sponsored predatory-lending program that makes even the most ruthless private credit-card company seem like a "Save the Panda" charity. Why is this happening? The answer lies in a sociopathic marriage of private-sector greed and government force that will make you shake your head in wonder at the way modern America sucks blood out of its young."

And don't forget that government support of public universities has been cut dramatically over the years. Many large public research institutions ceased being "state supported" universities and instead became "state located" universities in the past two decades. It's only going to get worse as the tea baggers insist on deeper and deeper cuts to everything but the defense budget.

And don't forget that government support of public universities has been cut dramatically over the years.

[...]

It's only going to get worse as the tea baggers insist on deeper and deeper cuts to everything but the defense budget.

Who can continue to pay for something that has for many decades consistently increased faster than not only those state government budgets, but the economy of the US as a whole? Budget items which increase much faster than the rate of growth of the US are a big target for not just "tea baggers", but for anyone who has their own share of the pie to protect.

A huge part of the motivation behind the tea party movement is to combat these ballooning costs.

So let me trace out what I think the cause and effect chain is here. 1) Universities go up in cost faster than the rate of growth of budgets or economies for decades. This leads to 2) reduction in government support for universities. 3) The same sort of lack of spending control over entire US-based government budgets leads to 4) tea party movement which wants to cut everything except allegedly that defense budget.

So we can complain about reduced government spending on universities or tea baggers, but I think it'd be far more productive to address initial causes, out of control spending.

When times are bad the state cuts education funding because, well, times are bad and money is tight. When times are good state cuts education funding because fewer people are going to school so we don't need the schools that badly. State takes it out of education no matter what.

So tuition goes up in good times and bad, it goes up faster than inflation since the schools are not only hit with inflation, but hit with shrinking state support

So who is +5 insightful a comment that has gay/political slurs in it? It's ok to use slurs when you don't like the group he's making the slur against? I'm not suggesting that he can't post what he wants, but the people modding this up are hypocrites.

Tenured professors don't necessarily get outrageous salaries. I looked up one of my professors in graduate school: late-career full professor, solid international reputation, great researcher, great teacher. He made $110K or so -- far below what he'd be worth to private industry.

States want to give less money to state schools. Well, when there's less coming in from taxes they can either cut services, or raise prices. "Do more with less," is a line from uninformed PHBs and politicians, it just doesn't work that way. Many universities have done both, cut some services, and raised rates.

There are lots of English departments that have cut standards based on both the quality of entering freshmen and a "gotta protect students' self-esteem" mentality. I'm in physics, where we don't normally grade based on grammar, but at one point the professor I was grading for said "Look, this is ridiculous. Just go full grammar-nazi on next week's reports." It was a bloodbath.

The more they try to make college "affordable" via loans, scholarships, etc. the more the colleges and universities will raise their prices until it is just barely affordable by all participants. They want to maximize their income -- as any business does. On the other hand, if we were to cut off student loans and scholarships you can bet that the prices would plummet and they'd stop building fancy buildings named after themselves. (Some universities have exercise areas that are reminiscent of spas and exclusive health resorts than a university.) It is amazing that our parents and grandparents were able to do things like send men to the moon without plush padded seating and nicely carpeted hallways at their universities. Even so, they could still afford to get an education.

It is indeed very simple. If the government gave a subsidy of $100 to buy a car, guess now much the cost of a car would rise. There are always unintended consequences when Gov't starts meddeling. Home price bubble was from making loan interest tax deductible and keeping interest rates very low; similar thing going on in student loan arena -- stop throwing money at the colleges and the price will then stabilize and go down. *wherever* government meddles to stimulate the demand side, the prices rise. This is econ 101.

If you'd really been paying attention you would have noticed the inflection point since 2002. Between 1913 and then house prices roughly followed inflation, with some up and down swings. They didn't start going nuts until 2002.

That is exactly why costs are going up. A bank knows when they make the student loan, that it can't be dispensed in bankruptcy. It is a form of modern day slavery. Make those loans subject to bankruptcy and the prices will eventually drop. If not, when you get out of school, many places are happy to give you credit cards. Take them and use those little checks to pay down or pay off the student loans. Those do go away in bankruptcy.

My local university has been buying up highrises downtown and building huge complexes for their different departments. The Engineering department has moved 3x in the 15 years I've lived here. Each building an architectural wonder. I can understand their desire to show off their engineering prowess but to the tune of 100 million a pop it's getting a bit ridiculous. My niece is going to school for engineering and her tuition is $30k/year. When I went in the 90s it was less than $5k. $30k a year is just unfathomable. There's no way she's getting that kind of value out of that school.

It is amazing that our parents and grandparents were able to do things like send men to the moon without plush padded seating and nicely carpeted hallways at their universities. Even so, they could still afford to get an education.

Baloney. YOUR parents and grandparents may have been able to go to college, but the loan crisis is primarily among those whose parents and grandparents did not and could not. They were more likely working manufacturing jobs that don't exist any more.

In your great-grandparents' day, very few people got a college education at all. In your grandparents' day, the post-WWII GI bill (i.e. government money) accounted for most of the increase in enrollment. Then the boomers got affordable state-subsidized education, supplemented with plentiful high-paying low-skilled jobs to work their way through, plus loans that could be discharged in bankruptcy if necessary.

But even since 1975 college enrollment rates have increased by another 50% (from a bit under half to a bit under 70% of all highschool graduates). And, as I started with, you can bet that most recent 20% is heavily weighted towards those for whom the option to loans is not "figuring it out," but rather dropping into the ranks of mere highschool graduates, which now equates to the working poor.

This is the best comment in the thread (currently) in my opinion. Thank you for clearly spelling exactly how my generation is being screwed over by the boomers who got theirs'. Now that they're on top of the shed they're doing their hardest to kick the ladder away so they can squeeze a bit more spending money out of the economy to enjoy during their retirement. They're the most selfish narcissists our country has ever produced, and they have the gall to call US entitled brats who don't want to work.

I'm not sure if that is sarcasm nor not. The education system in Japan is largely based upon rote memorization and is known be counter productive in terms of creativity. The United States are up there on the list of countries with the most working hours and least amount of vacation time taken.

"They called me at work, sometimes two to three times a day, doing all the stuff they aren't supposed to do: threats, et cetera," says 41-year-old Shawn FitzGerald, who owes $300 a month and says he expects to be paying off education loans into his sixties. "They told the receptionist at my job that I was in legal trouble...."

"I have been told I made the wrong decision going to college, as well as being told I was a failure, an idiot and a mooch," says Larissa, a young woman from a blue-collar town outside Chicago. "I've had ex-boyfriends that I never even lived with contacted by collection agents, my childhood friend's distant relatives contacted by them, as well as distant relatives of my own...."

Hey OPAMA, you wanna get the country out of it's slump? Forgive student loan debt. That'll do more to boost the economy than your silly bail-outs.

I've watched tuition at my local state university go from $150/credit hour to $350/credit hour in 8 years. I have friends graduating with engineering degrees that have 30k in debt from a STATE SCHOOL. This isn't an Ivy League school, but a state university. How does that compute? And the whole time, the school itself is hiring more Administration people and getting rid of, or driving off, many of the professors.

Tuition continues to skyrocket, yet they close more sections for classes every semester. How are you going to sit there and tell me that "tuition needs another hike this semester", and "oh by the way, we're only teaching Kinematics in the Spring now, so you'll have to wait till next year. Sorry."

I have friends graduating with engineering degrees that have 30k in debt from a STATE SCHOOL. This isn't an Ivy League school, but a state university. How does that compute?

It "computes" BECAUSE they went to a state school. If they had gone to an Ivy League school, they would probably have much less debt, if any.

For most students, a good state school is more expensive than Harvard, Princeton, Yale, and so on. That's because the Ivy League schools (and non-Ivy top private schools like Stanford, Chicago, MIT, Caltech and such) have large endowments per student that generate lots of income that they use to provide generous need-based non-loan aid. At Stanford, for instance, if your family makes under $100k, tuition is waived. Under $60k, and Stanford also waives room and board.

State schools, on the other hand, do not have large endowments per student. If their state has budget problems, one of the first things to go is need-based non-loan aid.

This is probably the oddest thing about American higher education. It is actually possible for someone to legitimately say "I could not afford to send my kids to Cal State Fresno, so I sent them Harvard".

“I’ve been frustrated that those making hiring decisions can’t see a little further. In some formats, especially in IT, the 4 year process doesn’t work for some, especially those who have learning disabilities, “The older college system is not for all, and some people learn better on their own. It’s an antiquated system, especially in IT.”

“Schools that are based around 2 years of intensive, hands-on IT training are much better equipped than those spending on English or composition classes. That’s how you can be more flexible and keep up with the industry. Even awarding badges would make the system more relevant.”

I read about this all the time and wonder to myself, "Who is their right mind goes 100k in debt for school?".

Students need to take some responsibility here. You may:

* Have to go to community college for the first two years* Have to live with mommy and daddy for a few years* Have 6 roommates* Have a job (yes I am aware that isn't as easy as it sounds)* Wait a few years to attend college so you can save money* Join the military so you can get the GI Bill* GO TO A CHEAPER IN STATE SCHOOL!

Yes college is expensive but a lot of the time what I see is students wanting their cake and eat it too.

I think your suggestions are good, but I think it's wrong-headed to blame the students for 'not taking responsibility.

This is a systemic problem. We have a bunch of 18 year-olds with relatively little life experience, and we keep telling them that going to a good college will make them rich someday. We give them the impression that taking out massive amounts of student loan is a wise move. This message comes from parents and teachers and politicians and the media, and you can't blame a bunch of kids for believing it.

We need to take a good hard look at how we're treating education. Is college a place where kids can receive a good general education, or are they vocational schools? Are we promoting education for the good of our society, or do we think it's a privilege for rich people that should be denied to the poor because they haven't earned it? Is the purpose of college to educate our young adults, or to entertain them with frat parties and amateur minor-league sports teams?

In its most recent survey of college pricing, the College Board reports that a "moderate" college budget for an in-state public college for the 2012–2013 academic year averaged $22,261. A moderate budget at a private college averaged $43,289.

OK. A little math here: A "moderate" cost for 4 years at a state school (not counting inflation, which makes this a joke really): $89,000. "Moderate" cost for 4 years at a private college: $173,000.
So who goes into 100K kind of debt for school? It looks like pretty much everyone who doesn't have family resources to fall back on.

All the responsibility is being shuffled onto the students. That's the problem.

"Who is their right mind goes 100k in debt for school?".

Someone who wants to go to a good law school, and double that for medical. Your unspoken implication is that only the well off have any business going into such high-end professions, thus starting a veritable caste system.

Is that a bug, or a feature for you? Don't bother with the "I put myself through school working part time in the 90's" that some helpful person posts in any of these discussions, when costs have doubled a few times since then.

This article, like many others, misses an important point. Even if colleges hold their total expenditures to the rate of inflation, state support has been declining dramatically over the past decades. As a consequences students are picking up a greater share of the total expenditures through tuition. Clearly that will result in tuition rising at a rate faster than inflation.

If you want to attack wasteful college expenditures, which is a worthwhile topic, you must focus on total expenditures per unit of size (student, degree, credit hour, whatever). Looking at only the part of the expenditure financed by tuition is highly misleading. Unless we're talking about for-profit colleges. Those are sucking the lifeblood out of college-bound youth. Just look at the per degree debt levels of college loans that go to for-profits. "Among all bachelor's degree recipients, median debt was about $7,960 at public four-year institutions, $17,040 at private not-for-profit four-year institutions, and $31,190 at for-profit institutions." [http://www.asa.org/policy/resources/stats/]

I had a solid 6 years worth of state school tuition/costs in the bank by the time my daughter was 6. Now that I've still got 7 years to go, we're hovering between 4 and 5 years worth. I feel like there should be some way to invest in colleges, 'cause I'm certainly not getting that kind of ROI in the market!

*Yes - you can pre-pay for college in some states. As crazy as all get out - if you want to pre-buy 4 years of State school in Virginia for a 12 year old it will cost you MORE than if you buy it for a 16 year old. Even they know that the system is fucked.

I bought three years of prepaid tuition for my son and daughter in the early 2000's, about four years before the first one went to college. I liquidated investments in an UGMA fund to do so, reasoning that the prepaid plan would appreciate at the rate of tuition inflation.

Tuition was frozen in Maryland that year, and didn't increase at all until the first child graduated.

And to make things worse, the UGMA was mostly stock, and partially stock in... Apple.

Part of this has to do with the subsidies they add to tuition. I remember when I was in school, tuition was about $2000 per semester. One semester, they decided to jack up tuition by $400. Most of that $400 was earmarked for subsidies for lower-income students. I found out during a meeting where the chancellor announced the change that 40% of our overall tuition went to subsidies. 40%! At which point I asked:

"So you're increasing tuition to help students who can't afford tuition, because we keep raising tuition to help students who can't afford tuition?"

What other industry relies on teenagers (who don't know any better) having the power to (borrow) and spend hundreds of thousands of dollars.

Cars don't cost that much. Teenagers don't buy houses. The decision-makers here are people who aren't even old (or mature) enough to drink - are completely impulsive - have no life-experience and less of a tangible "long-term" outlook - and they're actually *pressured* (by society, parents, high-school guidance counselors, etc) to go with the BEST school they can [at any cost].

40 years ago you could reasonably go to school and pay for your tuition and fees by working a manual summer job. There are no jobs out there which pay a year's tuition in 3 months for untrained labor, or anything close to it today. Heck, the average starting ANNUAL salary is less than tuition/room/board for a year at practically any private university today.

To be fair, the minimum wage back then was the equivalent of about $9 an hour [wikipedia.org] today. Plus you didn't have to have a degree to get a much higher-paying white-collar job, like you do now. In the early 70's my parents bought a house while working part-time office jobs and putting themselves through full-time gradute school and taking care of a small child. Try that trick now.

Wait...I forget. Which economic injustice were we complaining about here?

this has been well known for nearly 3 years but it doesnt really get much coverege because, well, yeah its the same on a number of levels but disasterously worse.
School loans cant be absolved through bankruptcy, they'll take them from any form of income you earn. this 'perpetuity' makes them attractive to investors because its "foolproof" and acceptable by the plutocracy because it ensures that even if you get a good education, your position results in nothing more than endentured servitude to the state in the hopes of one day living the american dream after those loans get paid off. politicians like the idea because it boosts school enrollment and kids think the whole thing is swell until they realize no ones hiring.

the most telling sign is the recent snafu about the student loan rate, which was tossed about without much bickering at all despite the fact that both sides of the house mortally detest the other. a deal was reached quickly for a number of reasons, not the least of which include another round of occupy protests but this time perhaps with violence and property damage that isnt fabricated by the news. We are by all indications keeping the ship afloat and trying not to draw too much attention to the flaming lido deck. Im not sure when its going to happen, but expect some serious shit to hit the fan when investors realize how dangerous it is to insist millions of people shuffle around with thousands in permanent debt. the fear isnt that some day the markets will crash, its that some day the kid with the biology masters working at dennys is going to pick up a molotov.

Exactly like the housing bubble. Then they gave out loans to people clearly unqualified, clearly unable to pay back the loan, low-documentation loans, no-documentation loans, interest only loans, negative amortization loans, etc etc. Now they colleges are egging on the students to assume enormous loans for useless degrees that will never get the student a job that could pay back the loan.

We should put the onus on the universities, to certify that if the student completes the degree he/she is seeking, there is at least some reasonable chance the loan will be paid back. They universities should disclose the mean and median starting salaries of the majors they are offering. Like the home loans used to have some basic rules like, "not more than 27% of gross for mortgage, not more than 34% for all loan payments, 20% down". Similar easy to grasp metrics should be made available.

But in a free market economy, if some people want to shoot themselves in their foot, there is nothing to stop them. But at least we someone should be telling them, they have a gun in their hand pointing to their feet and if they squeeze the trigger they will get hurt. Instead we are incentivising the bullet peddlers .

Interesting since the president of the college I work at just had a letter about this in the Huffington Post [huffingtonpost.com]. One quote: "According to the College Board's 2012 study, Trends in College Pricing, the average tuition and fee rate has increased at an average of 2.44 percent at private, nonprofit four-year colleges in recent years; in fact, when one accounts for financial aid and scholarships, the average inflation-adjusted net tuition at private colleges has actually dropped by 3.5 percent over the past five years. "

Now, that's for private, non-profit schools. Public schools it has jumped substantially, but not for any nefarious reason: it's what happens when the state legislature looks for easy cuts in the budget and axes higher ed first. When I went to William and Mary back in the mid-80s, 34.7% of the budget was covered by the state. It's 12.8% now, but they're still expected to offer everything they did before (and more) as well as give discounts to in-state students. That money can come only from two places: tuition and endowment.

Endowment is an entire 'nother subject. You might have noticed a serious drop in the stock market a few years back? We (and many other schools) run a three year trailing average on endowment draw, so that's still hurting badly. Oh, and you can't get bonds or other securities with yields higher than a percent or two these days.. Couple the two and your endowment income has cratered as well.

Can we cut budgets? Sure: I started here six years ago in IT and my budget is 20% less than was when I joined. Software vendors don't care: my SPSS licensing costs have tripled in those 3 years for example, and everyone else wants their 5% a year bump. And I'm at a healthy school: I've been at ones that aren't and it's worse.

The real abuse IMHO is the loan industry. We've somehow gotten this idea that it's ok to put yourself into debt for the rest of your life for a degree. (And that debt, unlike every other kind can't ever be vacated by bankruptcy) Nobody should take out $100k of debt for any degree, and the feds shouldn't back it, much like they shouldn't back flood insurance for people who want to live on barrier islands. That may mean you don't get your dream school. Maybe it means 2 years of community college before residential. There are plenty of ways to get an education- shop for them just like you would for an phone

The college I graduated with over 10 years ago posted annual 2014 tuition of $3333 x 4 years that is only 13,333. This doesn't include room and board. Yes, that is a reasonable amount of money(I lost more than this amount on paper with the 2008 housing value crash). But it isn't the life of being in the poor house that the media makes it out to be. I worked my way through school and didn't have much help from relatives. It isn't quite the party as having a free ride is, but it is still entirely doable in this day in age. I know there are a lot of universities out there that are charging 50k+ for a 4 year education. The school I went to was ranked in the top 50 of engineering schools in the US. I know I know not the top 10 but I'll live. Today's teens need to buck up, make wise decisions and be told that absolutely nothing is the end of the world until you die. If you are of sound mind and have the work ethic you have a solid chance to do whatever you want to do in life.

Go back to school at 3x the cost and then spend a year sending out resumes before you presume to lecture today's grads. Why is there's always some dude who starts up with their "back in myyyyy day" crap when costs have exploded since they graduated when Clinton was still president.

This is exactly what classical, supply-and-demand economics would predict.

Most of us understand why the government can't just print more money. The price of everything would just go up.

This is exactly the same scenario. The only difference is that in this case, the government is printing a special kind of money -- money that can only be used for one thing. It is no surprise when then price of that thing just goes up accordingly.

* The US massively subsidizes education. The price of education rises far beyond the rate of inflation.

* The US massively subsidizes housing. The price of housing rises far beyond the rate of education.

* The US massively subsidizes health care. The price of health care rises far beyond the rate of inflation. (Except, of course, the kinds of health care -- like cosmetic surgery -- that do not typically get subsidized. Costs in these areas have plummeted.)

I don't pretend to have an answer to this dilemma. The only really clear thing is that the laws of supply and demand aren't *statutory* laws, that can just be altered with a pen and a lot of hand-waving. They are fundamental natural laws, and well-intentioned attempts to manipulate markets (from student loans to price-control regimes) almost always trigger equal and opposite consequences.

The real shame is that important issues like these are so easily demagogued. Even though the system is clearly broken, no politician in his right mind would ever propose changing it. "Look!" people would scream. "He hates education! And poor people!"

Anyone who's been exposed to universities at the faculty or administrative level, as an outsider, can see that the system is a nightmare of waste. I was brought on during a supposed hiring freeze to teach a non-essential course at a university in my area; I was taking over for a friend who was no longer free. By the end of that same semester they had begun major construction on campus. At about the same time one of the professors approached me about buying new computers for the class. It blew my mind that this guy was suggesting top of the line Mac Pros and an all new suite of software to replace what we had been using. What we already had was more than adequate and fairly current, and that's not to mention that the school already gave most, if not all students a Macbook of their own. T

Money is no object at these universities. It reminds me of the healthcare system where the solution to every financial problem is to simply raise rates. They've got to have the latest and greatest of everything regardless of whether it provides any real value. Unfortunately, there's budgetary control is nonexistent; it's literally a free-for-all.

If the university administration gets it in their heads to focus on athletics then you're really screwed. They'll hire some high profile individual, at massive expense, to bolster their athletic program. That entails further spending all with the goal of having one good year to get the university on the map. The hope there is obviously to attract more students, even if it comes at the expense of academic quality.

The problem here also is that no one is identifying and addressing the problem. Americans are far too comfortable with getting into debt. So they'll take out these massive loans, and the money the parents "save" by not paying for school goes to spoiling the student with a shiny new car and generous housing. Most people seem to believe that the solution to the problem is to make getting loans even easier.

The stat I heard several years ago is if the price of milk had risen at the same rate as college tuition we'd be paying $40 for a gallon. The economics are seriously screwed up but I see no evidence that the bubble is going to burst. The same school I taught at has seen a continued construction boom. I have no idea what's going on anymore, but new buildings are going up all over campus.

But the really screwed up thing here is that they do nothing at all for the community they reside in. It's a giant money sink that skips right over the surrounding communities. Unfortunately, because these schools grease the right pockets they get to operate with impunity. It's those neighboring communities who suffer the consequences.

There was a day when a College education was affordable, and an enterprising student could work their way through college on a part time job. Then the government got involved providing federally guaranteed student loans. This enabled colleges to start raising tuition, because now students could finance their way through college. Today, any college that doesn't raise their tuition is simply leaving money on the table - they'd be fools not to raise rates. The horse has left the barn, and the race is on. There is no upper limit now to what colleges can charge for tuition because the loans are guaranteed.

Now, the political side of this is that conservatives never wanted the government involved in the first place, because government involvement always distorts the market (which is exactly what has happened). Progressives called the conservatives heartless because they wanted to deny education to the poor and underprivileged. Somehow this argument always seems to work - we want life easier today and never think about the consequences. (Progressives and conservatives exist in both parties, don't let anyone fool you into thinking this is a democrat/republican thing.)

Now we have the consequences: Tuition rates that are skyrocketing and it is now near impossible to go through college without taking on obscene levels of debt. Those who decried government involvement in the first place, would like to see government get out of the student loan business. The reaction is obvious: "You are anti-education! You are not for the poor and underprivileged!"

And so here we are, the way to stop it is to collapse the 'Government-Educational-Complex' - shouldn't be hard. The actual value of a college education is rapidly approaching nil, yet people are paying more and more for it. Government is always happy to enslave you to the debt, because then you'll always vote for the party who promises keeping rates low and/or forgiving your student loan debt. If that isn't slavery, I don't know what is.

[Our leaders] focus on the price of everything, without grasping the value of anything. And the value of a college education â" not only to Americaâ(TM)s youth, but most significantly to our whole societyâ(TM)s economic and democratic future â" is clearly established.

So the big question to be asking is this: Why isnâ(TM)t higher education free? Les Leopold, director of the Labor Institute, notes in a July 2 Alternet piece, âoeFor over 150 years, our nation has recognized that tuition-free primary and secondary schools were absolutely vital to the growth and functioning of our commonwealth.â

Providing free education, from kindergarten through high school, paid off big for us. Today, though, thatâ(TM)s not enough, for open access to a college degree or other advanced training is as vital to America as a high school diploma has been in our past.

Forget interest rates, young people should not be blocked by a massive debt-load from getting the education that they need to succeed â" but also that all of America needs them to have for our mutual prosperity and democratic strength.

While I would have loved to receive an advanced education for free, I really don't understand what all the fuss is about. I worked my way through debt-free and received my "4 year" degree in 5.5 years by going to a state university and living a reduced lifestyle. Why can't others do the same? Why do they have to go into debt in the first place? This smells more like a problem with irresponsibility and poor life choices than some sort of systemic issue.

If you are paying $25k a year in tuition and are making $40k a year, you will also end up with debt. Federal and state taxes will eat up 33% of that $40, so you're talking $26k left. Then you've got rent, and even a slumlord will charge $300/mo so you've got $22k left (and if you want to stay at a university dorm, that'd be $10K/yr). Then you've got food, and even an anorexic will have to pay $40/week for food, so that's another $2k a year gone and you've got $20k left. You better be walking to college because there's no way you've got money for a car, car insurance, or gasoline. So, living in a slum, walking to college, eating like an anorexic, not buying any new clothes or any new anything, and "making" a $40k salary, you've got $20k to pay off your $25k a year tuition. That still puts you in $5k debt a year. By contrast, if you took your $20k over four years ($80k) and invested it piss-poor bonds of 3% interest a year, you'd have $260 thousand dollars by the time you retire (40yrs from now) with that money alone. If you're actually smart, the kind of smart that lets you get into college to begin with, you can be making 10% growth a year and have $3.6 million in 40 years. That's just with the $80k.

25k is an expensive tuition. Most tech schools have programs for 3k/yr or less, and many states have perfectly acceptable schools with tuitions 6-10k/yr for instate. The whole "100k in student debt" story is completely ridiculous. Unless you now go by Dr, if you paid 100k for your education you got fleeced.

State universities are being increasingly defunded by states who are facing budget difficulties. State universities are a nice to have for states but you can bet they'll try to defund them any chance they get. Worst of all states can dictate how much tuition state universities charge if they want state money and put a strangle hold on their staff and abilitiy to hire good professors and services for the university. The push has been towards privatization and eventual elimination of state schools thanks to state budget problems.

You're dating yourself with this comment. If you're paying full fair at most state universities, there's no way you can pay tuition and living expenses on a part-time job (even with full time in the summer). Perhaps this is possible at a community college if you work maximum hours (20/week), full-time in the summer, don't buy any new books/clothes/anything for 5.5 years.

For example - look at the University of California system, once considered the best public university system in the world, and one of the best bargains (not true anymore). They're estimating $30k / year for in-state students (including living expenses). Please tell me how you managed to make $30k/year working part time?

I did something similar: worked 30 hours a week, lived in cheap housing, took 6 years to graduate, but did so debt free. Having said that, I have mixed feelings about it. Yes I worked hard and sacrificed to make it work. I was lucky too though and had opportunities other people don't necessarily have:

1) I had a good quality state school I could attend.2) My parents let me live at home until I could find a good/cheap housing solution.3) My parents helped me out with classes my first year until I got established.4) I had good jobs in high school and was able to build a savings.5) I managed to get a civil service position at the University that provided me with some free credits every semester.

It seems to me that in today's world it may not be enough to be responsible and diligent. I'm not sure I could have done it had I not had the opportunities I had.

Long story short, because ceteris paribus is utter bullshit. There's a fair chance you got lucky, or live in a state that controls tuition better than others, or are leaving out part of the story (like any scholarships, grants, preferential treatment due to legacy/social/racial status, free credit hours due to employment, etc).

Point being, not all people/situations/opportunities are created equally.

Side note, your exceptional circumstances do not change the absolute fact that the tuition system is seriously gamed against most people.

It was 2002 to 2007. And as a young white American male also with no family money, I worked multiple jobs and figured it out. No loans at all, no scholarships either until my senior year when I managed to land a research scholarship that required 15 hours/week of research with a professor. I missed out on a lot as a consequence, all those "college experiences" that others talked about like parties and such. It was the lifestyle I couldn't afford, not the tuition.

What state, and what was the tuition? Here in NYS (SUNY) 10 years ago the state paid 75% of the tuition and you paid 25%, now it's the other way around. My wife is looking at upgrading from her associate's to her bachelor's and it's $14k/yr for nursing.

At min wage of $7.25 (minus 6.2% FICA and 1.34% Medicare) you would have to work 2090 hours/year (40.2 hrs/wk w/ no vacation, holidays or sick time) just to pay the tuition. Then there are books, either a place to live or a way to get back and forth to school, etc. Working your way through school ain't what it used to be.

As of three years ago when I was taking some classes there, my closest community college was $37.50 per unit (and the year before, had been $30.00 per unit). Apparently, it's currently $46 per unit [ivc.edu]. $900 for a 4-unit class is closer to the amount that I paid at a State school, about 5 years ago. I don't know where you live, but it sounds like you're being ripped off.

Everyone here does seem quick to say "Oh just do an ROI calculation on college and don't take it for granted you should go" without recalling that for decades now we've pretty much shoved the idea that "if you don't go to college you're a complete shit and failure of a human being (what are you gonna do, flip burgers? Because people who flip burgers are subhuman shit after all)" down everyone's throats, and most people don't want to be thought of as complete shit.

"Everyone here does seem quick to say "Oh just do an ROI calculation on college and don't take it for granted you should go" without recalling that for decades now we've pretty much shoved the idea that "if you don't go to college you're a complete shit and failure of a human being (what are you gonna do, flip burgers? Because people who flip burgers are subhuman shit after all)" down everyone's throats, and most people don't want to be thought of as complete shit."

Over simplify much?

Everyone SHOULD be quick to say "do a ROI calc" as well as decide if they should even go to college. A plumber doesn't need a degree and they generally get paid exceptionally well. Also part of that calculation should include expected income in their chosen field. If they can expect to make $20k-$30k, maybe they shouldn't be taking out $50k in loans. Or maybe they should go to a less expensive school. I'm sorry -- if the market is saturated with art history majors, you may end up flipping burgers to pay off your loans. Hell, the market is saturated with lawyers right now. I know a few who are working as paralegals and are happy to have the work.

I have little sympathy for someone who took out $100k in student loans they can't pay back because they can't find work. I have a ton of sympathy for someone who took out less than $20k in loans and are struggling.

Did you go in the 1960's or 1970's? What a bunch of freeloaders that generation was. Tuition was paltry, jobs plentiful.

I didn't realize that the 21st century definition of freeloader included people who studied and then got a job. If you believe that then you're suffering from Stockholm syndrome.

The problem is not that my generation were freeloaders, but that your generation is getting screwed. If my sympathies aren't sufficient, take heart in the fact that I'll also probably be getting screwed when my daughter goes to college. Actually before that - my wife needs to upgrade from her associate's to her bachelor's.

For Education, it's particularly unbalanced (depending on your tax structure), because taxing people who didn't go to college to pay for those who did it real economic unfairness.

I far prefer a system where your university gets some % of what you make in the first 10 years or so after you graduate, on some diminishing-over-time scale. Even better if it's a % of what you make beyond what the average person with no college degree makes. If a student doesn't earn more as a result of going to college, why sho

Most people make that decision while still a minor, and with no experience of the world, and based on advice from some adults they trust - often employees of the university.

Seems you hang out with pretty stupid kids then.

Lets apply your logic more broadly... what kind of forgiveness should we have for 18 year olds who enlist in the military for a term of years and later decide it might be the wrong move for them? Just cut them loose and forgive all of the money spent? Or require that they complete their ser

In much of europe, college is payed for by government issue 0% interest student loans to universities with tuition caps. The repayment of these loans is based on the persons income after graduation. If they never find a sufficiently good job after a certain number of years the loans are forgiven. It generally works out very well.

Yes, it's all tax money. The difference is that, in Europe, taxes pay for public education, healthcare, infrastructure, and so on. In the US&A, taxes pay for a bloated military and a massive espionage apparatus.

Completely true. I don't really care so much about the choice between "low taxes, few services" and "high taxes, many services", but what we have now is "moderate taxes, low services, giant military". That's far worse than the other two.

The only schools where athletics are self-funding with excess going to education are the big sports schools. Stanford, UCLA, UM, Ohio State, Florida State, and the other big sports names.

If a school isn't in the top 16, they aren't making their investment back in athletics. It's just a loss leader to stay relevant because their academics are irrelevant. And by staying relevant in athletics they're hoping they get applicants interested in attending there.

Really, though, it's really only indicative of warped USA priorities. Higher education is supposed to be about education, not school spirit, not meatheads throwing balls around, not ticket sales, not full-sail scholarships for those who will wind up contributing nothing to society except getting into professional sports and making a bunch of Gatoraide commercials.

It's a little bit like glorifying the British monarchy. Sure, castles and stuff bring tourism dollars, but at the expense of massive losses of waived inheritance tax by nobles.

I don't get the part of the article, where the author is complaining about the spending on the Athletics??

I mean, the football programs like where I went to school, MORE than pay for themselves, they prop up all the other non-revenue generating sports.

It isn't like student tuition is going to college athletics, in fact from the schools I know. the athletics are subsidizing the rest of the school...

I grew up in the south, I'm talking about schools like U of AL, LSU, the schools in MS...etc.

Is that not the way it is in other school conferences?

I'm not actually a huge sports fan myself, but c'mon if you're going to bitch, at least get the fact right on who is spending who's money where.

I agree it is atrocious what colleges are doing today...but let's be fair about the money accusations.

That's because everyone has forgotten the basic reason for colleges and universities. Places where people can go and learn, get an education, and/or research. Instead it has become a circus for sports - with its attendant media coverage, fan following, controversies, and what not.

I absolutely respect the need for entertainment and sports. I love it myself. But why the heck are colleges even involved in this racket? And it IS a racket. A racket that media houses and "the suits" that own sport franchises and clubs do extremely well.

So while you say sports should not be brought up in this discussion because it pays for itself, I say that is precisely the problem. Colleges now fancy themselves to be big businesses, sport franchises, media houses, and what not. And it should not be this way. And it is the students and their families that pay the price - literally.

Heck, this whole notion of profit and loss should not even be the primary point of discussion when you talk about colleges and hospitals. I'm an ardent believe in free markets and capitalism, but damn, these two things are so massively screwed up. If any organization's duty (in a capitalistic setup) is to its stakeholders, then these idiots needs to realize that when it comes to colleges and hospitals, their primary stakeholders are the people who patronize their services. Not frickin sport fans and beer bars.

Sorry for the rant. I'm terrified to think how horrible the system is going to be when my kid grows up.

The reason it isn't free is that both parties pray at the alter of free market capitalism. There is a part of the Democratic party that realizes the problems but they aren't the 2-3% of the electorate that decides elections and so the party can safely ignore them (just like the true fiscal conservatives on the right). Free markets only work when there is meaningful competition and true substitute goods, in the education market neither of these things exists, cheaper schools are not seen as substitutes and price competition is minimal to non-existant.

He said pray at the alter of, like a a deity, it doesn't actually exist, and no lifestyle you live will be "free market" enough for the ardent moralizers. It's a broken mentality. There never were "true free markets".

You show me a bubble growing by 5-8-10% a year and I'll show you a mass of government involvement; subsidies, tax breaks, guaranteed debt, etc.

Housing bubble? Fannie, Freddie, Ginnie Mae, Home Mortgage Interest Deductions, capital gains exclusion, etc. When the music stopped the GSE's held $0.5E12 of subprime, alt-a, no-doc, stated income garbage loans. Government was the Market Maker.

Healthcare bubble? Medicaid, Medicare, VHA, CHIP, TRICARE, untaxed employer health care benefits, etc. Obamacare is going to subsidize tens of millions of exchange policies. 46% of all US health care spending is via government and the costs are spiraling out of control.

You show me a bubble growing by 5-8-10% a year and I'll show you a mass of government involvement; subsidies, tax breaks, guaranteed debt, etc.

Alright. Explain the Rhodium bubble of 2008, the Great Stock Market Crash of 1929, Australia's Poseidon bubble of 1970, the Florida Land Boom of the 1920s, and the.Com Bubble of 2000 as "all government policy and government money."

I'd also strongly dispute that the healthcare crisis is all government's fault. Even a 100% private healthcare system is not a free market due to the lack of voluntary participation in the system and general lack of price-competition. (No one chooses the "cheapest" over the "best" unless they are simply priced out of the best.)

Exorbitant taxes? Nope. Most people pay something like 30%. While this is more than most pay in USA, when you add tuitions and health insurance it turns out we pay less.

Don't you also pay a 25% VAT on most goods and services? And even the lower rate for food is 12%? According to the Wikipedia, roughly 45-50% of your GDP goes into taxes and output government services. Total effective tax rates in the US are under 30%, even with our utterly ridiculous levels of military spending. We pay a *lot* less than you do.

Personally, I'd rather have the Swedish model due to the quality of the services rendered (except for your insane stance that each person's tax records must be a

Don't you also pay a 25% VAT on most goods and services? And even the lower rate for food is 12%? According to the Wikipedia, roughly 45-50% of your GDP goes into taxes and output government services. Total effective tax rates in the US are under 30%, even with our utterly ridiculous levels of military spending. We pay a *lot* less than you do.

I'm from Norway, not Sweden but I think your description is pretty accurate, on the other hand:

0-18: The state pays my parents for having me + free education.19-24: Got a master's degree for free, just cost of living25-62: Work, get taxed the shit out of but don't need health insurance, saving for my kids' college fund etc.62-67: Potential forms of early pension, but will affect later pension67-: Public pension, which is quite good if you've worked and paid taxes.

If you take the lifespan view you're probably not that bad off, you pay in a lot of taxes in the middle but overall the government pays for many years before and after that. Not everything goes into public services, a lot is also simply redistribution taxed one place and paid (or given tax breaks) another place. Cue the obvious commie comments, but it seems to be working rather well.

Its already tipping as defaults are at an all time high but thanks to the changes Bush passed in 06 you can't even get out of debt with bankruptcy and that REALLY needs to change. Living in a small college town I hear of at least a couple a year committing suicide because of student loans, last year one in my own building hanged himself because they wouldn't stop hounding him over it.

That said after the student loan bubble bursts they'll be one major bubble left to pop and that's the stock bubble [youtube.com] and when that one pops colleges will be ghost towns as it'll make the depression look like a flash crash, VERY nasty and only a matter of time now, the bubble is too massive to slowly deflate.

Its already tipping as defaults are at an all time high but thanks to the changes Bush passed in 06 you can't even get out of debt with bankruptcy and that REALLY needs to change

This is always something that has really bugged me. Why exactly is it someone's right to borrow money and then not pay it back? If you borrowed it, you should have to pay it back. It doesn't make any sense to allow people out from under their debts that they made the conscious decision to borrow. If you don't understand the total costs, how the lending and repayment processes work, or if you don't have any solid plans for living with that debt, you shouldn't be borrowing it. Period. I don't care if it's a m

In the case of student loans, it's because their first experience with debt wasn't an $800 credit card that caused them trouble but a $300,000 school loan that cost them $1.5M to pay off. They're young, naive, and ripe for the taking.

To put it into perspective: Legal college loans are morally equivalent to legalizing sex with anyone 10 years and older. Especially that sweet spot around 12-14 where they have none of the suspicion and all of the romanticism, and you can sweet talk them into anything--love 'em and leave 'em, give them tons of STDs, knock 'em up, pass them around to your friends to pay off your debts, the works. The whole while they're thinking, this is great. Until it isn't, then they're like, my life is horrible and I'm left with a broken vag and ass and fucking strange diseases and somebody's kid I don't know who....

That's basically what student loans do.

Regular bankruptcy is more an economics thing: there's no way this person is ever going to meaningfully pay this off, inflation is going to marginalize the damage his non-payment does, so it's less damaging to society to give him a pass [goohf.com] and mark that he's an idiot and you don't want to let him borrow money ever.

Actually, it does make sense. Burdening people with lifetime debt they'll never repay hurts the entire economy, which hurts everyone. These people will never be customers of any business, never contribute fully to the economy, and never have successful lives unless they can start over. It hurts society much more to "punish" them by making them tough it out and keep trying to service debt. If you want to hold them totally accountable, at least admit that you're cutting off your nose to spite your face just to exact some ideological, punitive, justice.

A loan agreement has to be mutually beneficial to both borrower and lender.

Government gives interest free loans, they get a highly educated populace who can afford to spend idiotic amounts of money, thus improving the economy and tax pool. The student gets a good education that leads to a better, healthier, happier life.

It's the definition of a win-win. Also, FWIW, the government isn't supposed to profit from doing it's job. That's kinda one major reason for the existence of government - to do the things that are not necessarily profitable, but must be done for the good of all.

Get real. Just look at other nations and how they handle their education systems. It is precisely because there is so much profit motive involved that things are the worst anywhere in the [first] world. And the patterns are plain for all to see. It's not a "free market" compatible situation. What do I mean by that?

Simple. We talk about supply and demand as key factors in the free market. But in cases where there is unlimited demand there is massive exploitation by business unless regulation is present. Take power for example. Most states understand that power has unlimited demand and that utilities must be regulated. California and Texas went with deregulation ostensibly to increase competition and lower prices while increasing quality -- free market thought. What happened? The highest energy prices in the nation. And medical costs are another example. The system grew from a pay the provider system where multiple providers can compete for your business into one where consumers pay using "someone else's money." (The insurance system) Once medical insurance became a virtual requirement for having access to healthcare, competition all but disapepared and prices went crazy. And consumers didn't care because they paid seemingly reasonable monthy costs for something only a small percentage of people were using. (Paying for something they MIGHT need under terms which they don't understand instead of simply paying for something in exchange for something.)

The problem is that free market capitalism can never exist in its purest form because human corruption will always creep in with every form of bait and switch imaginable. They are actively redefining words, terms and expressions so people don't get what they think they are paying for. ("Unlimited"? Really?) And the same free-market people are lobbying and standing in line for their government subsidies all day long while complaining they want government out of their lives.

So you can go on trolling with your right-wing nonsense because it doesn't work any better than left-wing nonsense. Everything has practical limits in one direction or another and those limits should be defined at the point where peoples' worst natures are activated and massive exploitation begins to occur. And it's precisely the goal of preventing massive harm and exploitation which government should exist for. Obviously, this means business lobbies should be forbidden but that can't happen without a massive revolution so I wouldn't look for it to happen. But the next best thing is for people to wake up and start caring about what goes on in government at all levels. These days, most corruption is done in plain sight. People just have to look and care about it.